Do cohesion funds foster regional trade integration? A structural gravity analysis for the EU regions

This paper uses a structural gravity model to explore the regional trade and welfare impact of the EU Cohesion Policy Transport Infrastructure Investment programme estimated using a novel data-set of the Generalised Transport Costs for the EU regions at the NUTS2 level. The results indicate that on average additional investment in transport infrastructure can increase NUTS2 total regional exports by 0.40% and regional real GDP by 1.13%. Central and Eastern European Regions enjoy the highest exports and GDP gains, while few Western European regions experience a negligible decrease in wages, which may occur as a result of factor price convergence.